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Monday, November 25, 2019

Court Awards Cable Franchise Fees to Village over County

In Village of Campton Hills v. Comcast, the Illinois Appellate Court clarified the application of Section 5-1095 of the Counties Code and awarded five-year’s worth of franchise fees to the Village.

The facts in this case occurred over a long period of time. Originally, the County and Comcast approved a cable franchise in 1988 that had a 15 year term. The franchise agreement covered unincorporated territory which included an area that later came within the boundaries of the Village. Once the original term expired, the County adopted a series of one year resolutions designed to extend the term of the franchise. In 2007, the Village was incorporated by referendum. The Village and Comcast subsequently approved a new cable franchise agreement that became effective January 1, 2008. Despite the new Village franchise agreement, Comcast continued to pay franchise fees to the County. As a result, the Village sued Comcast demanding payment of the franchise fees. Comcast added the County to the case and asked the Court to declare the parties’ rights.

Section 5-1095(a) of the Counties Code provides in relevant part: 
(a) The County Board may license, tax or franchise the business of operating a community antenna television system or systems within the County and outside of a municipality, as defined in Section 1-1-2 of the Illinois Municipal Code.
When an area is annexed to a municipality, the annexing municipality shall thereby become the franchising authority with respect to that portion of any community antenna television system that, immediately before annexation, had provided cable television services within the annexed area under a franchise granted by the county, and the owner of that community antenna television system shall thereby be authorized to provide cable television services within the annexed area under the terms and provisions of the existing franchise.  In that instance, the franchise shall remain in effect until, by its terms, it expires, except that any franchise fees payable under the franchise shall be payable only to the county for a period of 5 years or until, by its terms, the franchise expires, whichever occurs first.  After the 5 year period, any franchise fees payable under the franchise shall be paid to the annexing municipality.  
The trial court ruled in favor of the Village and granted the franchise fees to the Village. The Appellate Court affirmed, explaining as follows:
the first sentence of section 5-1095(a) granted the County the authority to franchise and tax Comcast but limited that authority to areas 'within the County and outside of a municipality.' . . . In November 2007, the County’s franchise (extended by resolution) expired. The County’s attempt to pass an extension in December 2007 was after the prior extension’s expiration and was ineffective as to property within the Village. Therefore, when the Village passed its Comcast franchise ordinance, effective January 1, 2008, it was the only effective franchising authority and the only entity entitled to collect fees from that time forward.
The Appellate Court also stated that:
in April 2007, a part of the County’s [franchise] area was incorporated as the Village. Thus, pursuant to “law,” section 5-1095(a) of the Counties Code, that part of the area was no longer subject to the County’s franchise agreement.  However, the incorporation of the Village did not impact the County’s franchise agreement with respect to the parts of the County that remained unincorporated. Thus, the trial court did not improperly modify the County’s franchise agreement with Comcast; rather, it ruled in conformity with the contract and the law.
As a result, the Court decided that the Village was entitled to all of the franchise fees related to cable subscribers within its jurisdiction from 2008 through 2012, the disputed five year period. In addition, the Court found that the County is required to reimburse Comcast for all of the wrongfully paid franchise fees during that time. The Court did not address the issue the Village raised as to whether incorporation and annexation are the same for interpretation purposes, finding it unnecessary to decide based on its ruling in favor of the Village.

Post Authored by Adam Simon, Ancel Glink

Disclaimer:  Ancel Glink represented the Village in this case.


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